Tropical Battery to test EV market with first 40 bikes
Aiming for a minimum 15 per cent growth in revenue, annually, energy storage company Tropical Battery is days away from clearing its first shipment of 40 electric bikes, as it prepares to enter the world of auto dealing.
Having secured a dealer’s licence, the energy company will launch into the electric vehicle market as seller of motorcycles but intends to ramp up to EV cars through subsidiary Tropical Mobility.
Tropical Battery Company will display the bikes through its national network of eight stores.
“We’re starting out with 40 bikes, six or seven of which will be purchased by Tropical Battery for our delivery service. We will be testing the retail market with the remainder, but our plan is to market the product to climate and environmental conscious clients,” said Managing Director Alexander Melville.
Tropical Battery spent $15 million to set up the EV unit and is now the exclusive dealer for VMoto bikes.
The bike was tested for its fitness for Jamaica’s climate and hilly terrain over several months, and the first shipment is due next week.
“We have seen these bikes operating in similar Caribbean territories so we are confident in its efficiency. They also come with two batteries so you can have one on the go and the other charging,” Melville said.
The diversification into auto trading comes amid a deepening of the company’s footprint in clean energy, one manifestation of which was its recent acquisition of a 50 per cent stake in Dominican Republic company Kaya Energy Group, through a cash and share deal. A cash payment of $61.5 million was booked for transaction in the company’s March quarter results.
Tropical Battery says that under the partnership with Kaya – a company that deals in the installation and financing of solar power systems – it has already installed about 160 kW of residential and commercial solar projects through a newly formed subsidiary called Tropical Renewable Energy.
Tropical Battery, which has operated for seven decades, largely gets its revenue from the sale of conventional batteries. The company estimates its market share to be roughly 65 per cent in Jamaica and although commendable, Melville says it doesn’t offer enough scope for the company achieve its target annual revenue growth rate of 15 to 20 per cent.
“Moving forward we aim to have 70 per cent of our sales coming from Tropical Battery products and the remainder from the sales of bikes, solar inverters for any other business from our subsidiaries,” he said. The company names solar inverters as a high demand product.
In addition to Tropical Renewable Energy and Tropical Mobility, Tropical Battery last year formed Tropical Finance, which will provide financing for the purchase of its electric vehicles and renewable energy systems, the company said.
The auto battery supplier is also an equal partner with air-conditioning company CAC 2000 Limited in an a start-up called ENRVATE Limited.
Melville says Tropical Battery Company is still in acquisition mode and has feelers out for other vertically or horizontally aligned businesses.
“We are still looking for something to acquire within the region, including Jamaica. We plan to have revenue coming from multiple streams and so we are targeting low-risk, high profit margin businesses,” he said.
For the second quarter ending March 2023, earnings of Tropical Battery swelled 65 per cent to $49.7 million on revenues which grew 10 per cent to $700 million year on year.
Over a six-month horizon, earnings grew eight per cent to $94 million on revenue of $1.3 billion.
Melville says he expects revenue growth to be more in line with company targets over the latter half of the year, when business from Kaya is consolidated in its accounts, alongside organic growth from the sale of motor bikes and solar inverters.
As for its EV operation, the company has not indicated a timeline for expanding from bikes to other vehicles.
“We are still taking our time on the motor vehicles, but we’re only targeting full EVs,” Melville said.